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Gold Prices Sharply Lower on Profit-Taking; Bulls Exhausted?

(Kitco News) - Gold prices ended the U.S. day session solidly lower on heavy profit-taking and a corrective technical pullback from strong gains last week that saw prices hit a 12-month high. The gold market bulls now appear to be at least short-term exhausted after expending so much energy last week. April Comex gold was last down $30.60 at $1,208.60 an ounce. March Comex silver was last down $0.46 at $15.33 an ounce.

There is much better risk appetite in the world marketplace so far this week. U.S. stock indexes were solidly higher in early afternoon dealings Tuesday. Asian stock markets rallied Tuesday, led by China’s Shanghai stock index trading up over 3% on the day. European stocks were also firmer. If world stock markets continue to rebound, such would be a significantly bearish element for safe-haven gold.

There were reports overnight that Saudi Arabia, Russia, Venezuela and Qatar are saying they will hold their crude oil production levels at January levels, if other major oil producers do the same. That news have a lift to oil prices early on but those gains were eroded and oil prices were moderately lower Tuesday afternoon. The marketplace is skeptical any such deal could produce significant or lasting results. Iran says it won’t abandon its oil market share. Still, the news is a clear sign of the serious strains being put on those mentioned countries’ economies with a barrel of crude oil trading below $30.00.

The rebound in crude oil prices from last week’s low is a main factor helping to lift the world equity markets this week. Recently, world stock markets and oil prices have had a high correlation on daily price movements.

The other key “outside market” on Tuesday also worked in favor of the gold market bears as the U.S. dollar index was sharply higher on the day.

Technically, April gold futures prices closed near mid-range in a big trading-range day. Prices last week hit a 12-month high. Prices are still in a two-month-old uptrend on the daily bar chart and bulls still have the overall near-term technical advantage. However, the bulls now appear to be near-term exhausted and a bearish V-Top reversal pattern could be forming on the daily chart. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,263.90. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at 1,150.00. First resistance is seen at $1,225.00 and then at today’s high of $1,236.30. First support is seen at $1,200.00 and then at today’s low of $1,191.50. Wyckoff’s Market Rating: 6.0

March silver futures prices closed nearer the session low today on profit taking after hitting a 3.5-month high last week. The silver market bulls still have the overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. However, the bulls now appear to be exhausted. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $16.41 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.64. First resistance is seen at $15.50 and then at today’s high of $15.74. Next support is seen at today’s low of $15.155 and then at $15.00. Wyckoff's Market Rating: 6.0.

March N.Y. copper closed up 230 points at 205.25 cents today. Prices closed nearer the session low today. The copper bears have the firm overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the February high of 213.80 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of 193.55 cents. First resistance is seen at today’s high of 208.50 cents and then at 210.00 cents. First support is seen at today’s low of 203.75 cents and then at last week’s low of 199.85 cents. Wyckoff's Market Rating: 2.5.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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